Which of the Following Statements Is True

question 138

Multiple Choice

Which of the following statements is true?

• A) Network effects act as barriers to entry in a market.
• B) Economies of scale act as incentives for new firms to enter a market.
• C) If a firm is enjoying economies of scale, then its product must have network effects.
• D) If a firm's product has network effects, then the firm must be enjoying economies of scale.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a specific price, over a specified period of time.

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.

Quantity Supplied

The quantity of a product or service that suppliers are ready and capable of offering for sale at a certain price during a defined timeframe.

Equilibrium Price

The equilibrium price is the price at which the quantity of goods suppliers are willing to supply matches the quantity of goods consumers are willing to buy, leading to market equilibrium.